It’s an odd feeling to be accumulating money for the first time in my life.
When I was young, my family didn’t have much money. Any money I earned, I spent. This was a learned behavior. I was imitating my parents. After college, I allowed myself to be trapped in a life of credit hell. About five years ago I began to wean myself from credit. And in December 2004, I began the process of digging myself out of the hole.
I sat down one evening, made a list of all my debts, and stared at the numbers. They were intimidating. I had a car loan, a home equity loan (which I had used to consolidate my credit card debt), a computer loan, and two small personal loans. I had about $30,000 in debt. I knew that I ought to pay the home equity loan first because it had the highest interest rate, but I couldn’t bring myself to do it. It felt like I’d be paying on it for an eternity.
I had just received my Christmas bonus, and it was enough to pay off one of the personal loans and most of the computer loan. So, I wrote checks for these and mailed them. I felt guilty not having paid on my home equity loan. But when my bills arrived in early January, it was a relief to have one less debt, and to have the computer nearly paid off. “In fact,” I thought, “if I scrounge, I can actually pay off the computer loan now.” And so I did.
Within a few months, I had scraped together enough money to pay off everything but the home equity loan. It was amazing! I felt like a burden had been lifted. But I was still over $20,000 in debt, and the monthly interest was killing me.
For the past eighteen months, I’ve been plugging away at the home equity loan. I now owe $18,676.96. I’ve been gradually accelerating payments on it. With the end of the year approaching — and the all-important holiday bonus — I spent some time drawing up a repayment plan. My plan is aggressive, but not impossible. I want to be completely debt free — except for the mortgage — by the time I turn 39, at the end of March 2008.
It’s exciting to see this goal on paper, and to realize it’s within my grasp.
Meanwhile, I’ve begun to accumulate small pools of money here and there. I have a fine retirement plan through my day job, but I also started a personal Roth IRA through Sharebuilder last January. (I’m putting money into it when I can, but I won’t max it out until after I’ve repaid my home equity loan.) I have two savings accounts that are beginning to accumulate cash. These are the first savings accounts I’ve ever had. Ever. I also have an emergency fund with my wife. (We keep separate finances — that’s a subject for another entry.)
My checkbook is most impressive of all. I’m not running a zero balance. I’m not living paycheck-to-paycheck. I’m not toying with overdrafts every pay period. No — I’m carrying several hundred dollars in my checking account at all times.
But I still feel the urge to spend.
Though I’ve budgeted to use my Christmas bonus to pay down the home equity loan, I have visions of the shiny new toys this money cold buy: a new bicycle, more comic books, a fancy leather easy chair. In the past, I would have succumbed to these urges, prolonging my debt repayment. This year, I believe I have the fortitude to stick to my plan. If mid-January rolls and I’ve managed to use the money wisely, I’ll be very happy.
I’ll be happier still when I’m debt-free in March 2008.